Former US president Donald Trump has not held back from criticising the country’s environmental policy, with the Republican Party favouring increased investments in fossil fuels, grid resiliency and nuclear power, as well as deregulation in the energy space.
Or, as Trump himself would put it, “Drill baby, drill…”
A new paper published by Panmure Liberum, ESG Strategy – The Republican rollback of ESG in the US, examines the level to which a second Trump administration, coupled with the Republican Party gaining control of both the House and the Senate, would impact ESG and initiatives taken for changing of the climate.
In compiling the report, Panmure Liberum stated that it is ‘politically neutral but want to at least indicate where we agree and disagree from a purely economic perspective.’
‘Complete stop and reversal’
According to Joachim Klement, lead author of the report, in the even of Trump proving victorious in November, investors would have to prepare for a “complete stop and reversal of all ESG initiatives by the US government, including a stop to any future investments or loans funded by the Inflation Reduction Act. It would also attempt to reverse any regulatory initiatives to disclose ESG information or allow pension fund fiduciaries to include ESG criteria in their investment decisions.
“While the impact will be limited to US federal government investments and regulations, UK and European companies with operations in the US will be significantly affected as well,” Klement adds.
While Trump has distanced himself from the 920-page policy agenda known as Project 2025, that report’s attitude to ESG policy is much aligned with the position taken by the former president.
As the Project 2025 document notes on page 363, ‘The new energy crisis is caused not by a lack of resources, but by extreme “green” policies. Under the rubrics of “combating climate change” and “ESG” the Biden Administration, Congress, and various states, as well as Wall Street investors, international corporations, and progressive special- interest groups, are changing America’s energy landscape.
‘These ideologically driven policies are also directing huge amounts of money to favoured interests and making America dependent on adversaries like China for energy. In the name of combating climate change, policies have been used to create an artificial energy scarcity that will require trillions of dollars in new investment, supported with taxpayer subsidies, to address a “problem” that government and special interests themselves created.’
Trump: These fools are talking about climate change… They think the planet's gonna burn up. They have no idea. It’s weather pic.twitter.com/rDO5oKhU3S
— Kamala HQ (@KamalaHQ) August 26, 2024
Energy transition investments
As Panmure Liberum notes in its report, the Republican Party is focusing on reversing much of the progress made under the Inflation Reduction Act (IRA) and other energy transition investments promoted by recent legislation.
The Republican stance is rooted in the core conservative principle of limiting government intervention, promoting less regulation, and reducing taxes. They view the large-scale government investments and loan facilities provided for renewable energy and energy storage as forms of industrial policy that interfere with free markets.
As the report notes, in contrast, Republicans argue that funds allocated to green energy projects could be better used for tax cuts or bolstering US homeland security and defence.
National Security
Moreover, Republicans express concern that the energy transition increases the US’s dependence on supply chains controlled by China, thus compromising national security. They believe that prioritising fossil fuels over renewables is more aligned with maintaining US geopolitical independence and energy security.
‘The self-sufficiency of the US in fossil fuels means that it has complete energy security in this area,’ the report puts it. ‘Naturally, moving to renewables would reduce energy security and increase geopolitical dependency, even if only slightly.’
Given that the US has become the world’s largest producer of crude oil and LNG, surpassing countries like Saudi Arabia and Russia, Republicans argue that the nation’s energy security is best preserved through continued reliance on fossil fuels.
President Trump declares, “On day one, I’ll tell Pennsylvania to drill, baby, drill!” Time to make America energy independent again.
— Laura Michelle (@8k_rmz) August 30, 2024
Who’s ready to see gas prices drop below $2 a gallon? pic.twitter.com/nt0ssOR5ln
‘Readers may disagree with these first principles, but conservative policies are entirely consistent in this respect,’ the report notes. ‘And when it comes to US geopolitical independence, the energy revolution the country has gone through in the last 20 years means that a preference for fossil fuels over renewables makes sense.’
In alignment with this broader energy strategy, both former Trump and many Republican lawmakers support the expansion of oil and gas exploration in the Arctic, aiming to counteract perceived geopolitical threats from Russia and China.
Funding for green energy projects
In line with these views, Republicans advocate for abolishing all funding for green energy projects, subsidies, and energy efficiency regulations.
Their proposals include ending carbon capture utilisation and storage (CCUS) programs managed by the Office of Fossil Energy and Carbon Management (FECM) and halting financing for energy storage and smart-grid technologies by the Office of Electricity (OE).
The party also suggests closing the Office for Clean Energy Demonstrations (OCED), which was established under the Biden administration to accelerate the deployment of clean energy technologies in partnership with the private sector.
Paris Agreement
The United States’ involvement in the Paris Agreement and the U.N. Framework Convention on Climate Change would also be dead in the water under a second Trump administration, in a revival of the former president’s withdrawal from said agreement during his administration.
Pres. Trump says he is withdrawing U.S. from Paris Agreement due to the "draconian financial and economic burdens" agreement imposes. pic.twitter.com/th16CpsjS5
— ABC News (@ABC) June 1, 2017
While president Biden promptly reversed this decision, Panmure Liberum believes that the US is ‘far from achieving its climate goals anyway’, and will certainly miss its own obligations under the COP agreements.
It notes that for the US to reach Paris climate goals, emissions would have to be reduced by 50% by 2030, far beyond realistic expectations.
Regardless of who wins the November election, US policy is likely to move away from ‘climate change mitigation’ to ‘climate change adaptation’.
You can read the full report here.
